CityCoins are coins designed by their creators to have value within a limited geographic area rather than the infinite value regular coins have outside the cities they are created in.
Examples of CityCoins include MiamiCoin, where residents of Miami can mine the coin and use it for the city’s development.
But what are CityCoins, and do they have real-world applications?
What Are CityCoins?
Imagine being able to contribute to the welfare of your city and get crypto-based incentives as a reward. This is what CityCoins offers.
The concept of CityCoins was launched by Patrick Stanley, Blockstack’s former Head of Growth, who designed Stacks’ Smart Contract Protocol. CityCoins are built on Stacks, an open-source blockchain network backed by Bitcoin. Stacks allows users to develop their favorite cities and receive Bitcoin rewards. On this platform, users can also build decentralized apps and mint NFTs.
CityCoins are powered by smart contracts on Stack. Smart contracts are a type of programmable agreement that eliminates risks from other parties involved in the agreements by bringing transactions to completion only when all agreements, conditions, and arrangements have been met by all members involved.
CityCoins is privately-owned and not affiliated with any government or public organization. However, 30% of each miner’s earnings go straight to the digital wallet of the city to which the user contributes. So it’s a bit like earning free crypto for your city.
Furthermore, the CityCoins platform uses a multiple-token system, allowing each city in the project to have its special token. The first CityCoin, MiamiCoin (MIA), was created in August 2021. MIA was followed closely by NYC, belonging to New York City, in November 2021. The next CityCoin was ATX, conceptualized in 2022 for Austin, Texas.
How Do CityCoins Work?
The development of CityCoins is under the purview of the platform users. But they must complete a few mandatory processes before their CityCoin is fully operational.
The first step is the nomination of a city. Platform users vote on the city they want to launch a CityCoin. After selecting a city, the city’s mayor has to consent before the users can proceed. With the major’s consent, users can deploy the CityCoin. Any user can initiate this process using the Smart Contract on Stack.
Note that the CityCoin platform depends on two important processes: mining and stacking.
Mining CityCoins depends on two factors: the number of Stacks (STX) tokens you bid in relation to the total amount.
Bidding involves locking STX into a smart contract to be rewarded with CityCoins with the discovery of each block. This discovery takes place every ten minutes, and each miner can bid for up to 30 blocks at a go, increasing the chances of winning.
Also, STX deposited in the smart contract cannot be removed whether the miner eventually wins the block or not. As mentioned earlier, the probability of a miner winning a block depends on the amount of STX deposited in the smart contract relative to the amount deposited by other miners.
Winners for each block are selected using a verifiable random function. This function weighs the percentage amount of STX each miner bids. For example, a miner that deposits 20% of the total STX in a smart contract has a 20% chance of emerging as the block winner.
Of the total STXs spent by the miners, 30% is placed into a wallet for the city, while the remaining is given to stackers as rewards. The entire lot is sent to the city’s wallet when there are no stackers.
This process involves sending CityCoins to a smart contract for a selected period. After the period expires, the stacker receives their share of the 70% of STXs sent by the miners.
First, users of the platform must choose the amount of CityCoins they want to stack and the number of reward cycles they would like to participate in, with 32 as the maximum number of reward cycles. Note that you cannot stack in a cycle in progress, only incoming ones.
The stacked CityCoins are removed once the reward cycle begins and can be claimed when it is complete. For example, if you stack 10,000 CityCoins for a cycle after it ends, you can reclaim your CityCoins together with your STX rewards.
In addition, those who stack their STXs can earn Bitcoin as a reward.
The Stacks Protocol aims to improve the Bitcoin blockchain with highly modular decentralized apps (DApps) and smart contracts that don’t make any changes to Bitcoin features. Modular DApps enable developers to build upon the apps created on Stacks.
A proof of transfer (PoX) consensus mechanism regulates all transactions on the platform. This mechanism lays the basics for what all miners must do to develop apps on the platform.
Applications of CityCoins
Though still being developed in some cities, CityCoins have shown lots of promise, with the Mayors of New York and Miami outlining various plans for this new project. Here are some ways CityCoins can help grow a city.
Speaking to the Tony Blair Institute for Global Change, Miami City Mayor Francis X. Suarez has spoken of plans to share the dividends of Miami Coin among residents of the city with digital wallets, emulating countries like Saudi Arabia that share revenue from oil among its citizens. Miami’s possession of CityCoins and a digital wallet provides an avenue for actualizing these plans.
Creation of Transparent Structures
Cryptocurrencies like CityCoins are transparent, as all data and transactions are easily accessible by everyone. This enables CityCoins to be used as a platform for transparent revenue allocation and budget distribution.
Contribution to the city’s development is CityCoins’ primary use. CityCoins allow users to voluntarily contribute to their city’s coffers while being rewarded for it simultaneously. It encourages inclusiveness, increases revenue, and reshapes governance on a new level.
Should You Mine CityCoins?
CityCoins are a welcome development, as they provide residents an avenue to contribute to the economic growth of their city. Although, just like other cryptocurrencies, there are inherent risks, CityCoins has the potential to be a platform for implementing social policies and improving transparency in governance.